Vertex buys e-invoicing company Ecosio

Tax solutions provider Vertex announced its acquisition of Germany-based e-invoicing software specialist Ecosio.

The terms of the acquisition include an upfront cash payment of $69 million as well as a targeted earn-out of $76 million in cash and $35 million of Vertex shares. The terms are based on Ecosio achieving certain financial performance targets over the next three years, subject to adjustments pursuant to the terms of the purchase agreement. Vertex will utilize cash on hand to fund the upfront cash payment.    The closing is pending customary Austrian regulatory approval.

"This new endeavor with Vertex is a strategic move that will significantly enhance our ability to deliver exceptional value to our customers," said Ecosio managing director Christoph Ebm. "Our shared vision for the future and commitment to growth makes this alignment an ideal fit. By combining our complementary products and mutual values, we'll create new opportunities and expand our global reach."            

Integrating Ecosio's cloud-based global network with Vertex's own indirect tax solutions will enable customers to facilitate the creation, exchange and clearance of jurisdictionally compliant e-invoices and reconcile them with their periodic filing requirements. The combined solution is intended to aid companies in overcoming obstacles to geographic expansion and improve the efficiency of their compliance and reporting operations.     

"Over the past 40 years, Vertex has been a trailblazer in the field of indirect tax, continuously evolving and pursuing new growth opportunities for our world-class customers," said Vertex CEO David DeStefano. "By acquiring Ecosio's advanced technology and their team's extensive e-invoicing and EDI experience, we are committed to delivering a differentiated global compliance solution that simplifies both e-invoicing and VAT complexities. E-invoicing has emerged as one of the most rapidly growing challenges confronting global businesses, and with several large economies soon to adopt new requirements it makes this transaction a logical next step for Vertex to unlock additional value for our customers."     

The move comes at a time when more and more countries in the European Union are mandating electronic invoicing as per a directive approved in 2014, which was part of a wider push for greater interoperability between financial systems. Countries where e-invoicing requirements are already fully or partially in effect include Hungary, Italy, Belgium and Greece, with other countries like France, Germany, Spain, Portugal, Romania, Croatia, Ireland and others in different stages of advancement.

Consequently, many players in the accounting technology arena have been eager to expand their presence in Europe in order to tap what is likely a growing market for e-invoicing solutions. Vertex announced plans late last year to acquire 100% of the shares of e-invoicing solutions provider Pagero Group AB for approximately $555 million. The bid was, at first, well-received by the company, whose bid committee unanimously recommended accepting the offer.

However, just one month later, Vertex withdrew its offer in light of a much larger bid from Thomson Reuters, which ultimately beat out both Vertex and Avalara in acquiring a controlling stake in the Swedish company (see previous story) for $789 million.

While behind Europe, the U.S. has been increasingly interested in electronic invoicing: recently, the Digital Business Networks Alliance, a nonprofit backed by the Federal Reserve that serves as the legal entity overseeing the U.S. Open Exchange Framework, announced the first successful electronic invoice transmission over the U.S. network. The first invoice exchange occurred between two DBNAlliance service providers — Avalara and Storecove. Storecove received the invoice, issued by Avalara (which, itself, acquired Inposia Solutions, a German company that makes e-invoicing and digital tax-reporting solutions in 2021).

The transaction was executed from Avalara's E-Invoicing and Live Reporting solution, leveraging the DBNAlliance Exchange Framework for message transfer, process descriptions and document content exchange. The invoice was successfully transferred and imported by Storecove's e-invoicing and reporting solution, where it was processed and is now ready to be paid.